B55/100FDD 2025
Ellie Mental Health — Litigation & Risk
Health & Wellness - Other · FDD Items 3, 4 & 5
Elevated Risk
8 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
8
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
55 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
113
Government-backed loans issued
Default rate
9.1%
vs <3% typical · system-wide
5-yr default rate
9.1%
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$21.8M
Avg loan size
$193K
Participating lenders
12
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Minnesota
State whose law governs disputes — relevant if you're not based there
What drove the 55/100 rating
Risk Score Breakdown
- 01HIGHActive litigation from franchisees alleging misrepresentation of critical backend services (EHR, billing, credentialing) — core to operations
- 02MINORNet income deliberately withheld from FDD Item 19 despite $850K average revenue disclosure — opacity suggests inconsistent profitability
- 03MINORFranchisor pursuing aggressive non-compete enforcement suggests franchisee dissatisfaction and potential exit disputes
- 04MINORHigh unit growth rate (31.1% YoY) may mask underlying churn; 255 units is still small system vulnerable to reputation damage
- 05MINORInitial investment spread ($392K-$680K) with 7.5% royalty on collected (not gross) revenue creates cash flow pressure for slow-paying practices
- 06MINORHealthcare compliance exposure: mental health licensing, telehealth regulations, HIPAA liability not clearly addressed
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.